- NZD/USD is headed for the lowest daily close since late February.
- Technicals point to further short-term losses.
- The US dollar remains strong amid rising US yields and cautious markets.
The NZD/USD is falling for the fifth consecutive day on Monday and technical indicators point to oversold readings in the short term. Still, no signs of correction are seen. The break below 0.6750 has left the pair vulnerable to more losses.
Vulnerable below 0.6750
NZD/USD is trading at 0.6719, the lowest level in seven weeks. The Kiwi failed to recapture the 0.6750 area and weakened during the US session as US yields turned higher.
The US 10-year yield stands at 2.85% and the 30-year yield stands at 2.96%, the highest level since April 2019. DXY is up 0.25%, at 100.75, testing the high 2022. The stronger US dollar weighs on NZD/USD, which has been unable to benefit from higher commodity prices.
The current week is light in terms of economic data, the focus is likely to continue on Ukraine and expectations from the Federal Reserve and the RBNZ.
The key day in New Zealand will be Thursday with the CPI for the first quarter. “Headline inflation is expected to be 7.1% yoy versus 5.9% in the fourth quarter. If so, it would be the highest since the second quarter of 1990 and further above the 1-3% target range. Last week, the RBNZ delivered the expected 50bp hike and said it was comfortable with the rate’s expected path from the February meeting, which sees the benchmark rate at 2.5% in early 2023 before peaking. close to 3.5% in 2024”, BBH analysts mentioned.
In the US, the most relevant day is probably Friday with the service sector surveys. On Wednesday, the Fed will publish the Beige Book.
Technical levels
Source: Fx Street
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